Data from January 2025 reveals a staggering 82.5% year-over-year collapse in daily trading volume across South Korea's five largest cryptocurrency exchanges. The combined daily volume for Upbit, Bithumb, Coinone, Korbit, and Gopax fell to a mere 3.05 trillion won ($2.3 billion) as of January 18, 2025, down from 17.4 trillion won recorded on January 19, 2024.
The dramatic decline is directly attributed to a series of stringent regulatory measures enforced throughout 2024 by South Korea's Financial Services Commission (FSC) and Financial Intelligence Unit (FIU). Key policies include aggressive enforcement of the Travel Rule, which mandates exchanges collect and share detailed sender and receiver information for all transactions exceeding 1 million won ($750), enhanced KYC/AML checks, continuous banking partnership scrutiny, and uncertainty surrounding the delayed implementation of a 20% capital gains tax on crypto profits now slated for 2025.
Analysts interpret the volume decline as a sign of market maturation rather than pure weakness. "What we are witnessing is a necessary consolidation," explains Dr. Min-ji Park, a fintech researcher at Seoul National University. "The explosive, retail-driven volume of 2023 was unsustainable... The remaining participants are likely more institutional or long-term focused." On-chain data supports this, showing that while trading volume has collapsed, the total value of assets held in Korean wallets has not seen a commensurate drop, indicating a shift from active trading to passive holding.
The situation in South Korea mirrors broader global trends but with far greater intensity. While global exchanges reported an average volume decrease of 40-50% in 2024, South Korea's 82.5% decline underscores the unique and amplified impact of domestic policy. The global macroeconomic environment of elevated interest rates, which dampened risk appetite across all asset classes, has compounded these localized regulatory pressures.
The implications are significant for all stakeholders. Exchanges face pressure on transaction fee income, potentially leading to consolidation or diversification into new services like custody or staking. Investors face lower liquidity, wider bid-ask spreads, and increased price slippage. For regulators, the data presents a paradox: successful enforcement has cooled the market, but an overly rigid framework could stifle innovation and push activity to unregulated offshore platforms.
The future trajectory depends on several factors: the final implementation of the crypto capital gains tax, the potential approval of a spot Bitcoin ETF in South Korea, and the overall recovery of global risk-on sentiment.
